DEPARTMENT OF REVENUE

(1) The Department of Revenue will waive
the application for authorization filing deadline requirement under ORS 285C.140(1)
if:

(a) The taxpayer had knowledge
of the enterprise zone property tax exemption program prior to initiating its investment,
as shown by contacts made by the taxpayer with the Oregon Business Development Department
(doing business as Business Oregon), the enterprise zone sponsor, the local zone
manager or the county assessor; and

(b) The reason for the late
submission of the application constitutes good and sufficient cause as defined in
OAR 150-307-0500.

(2) In addition to the extraordinary
circumstances identified in OAR 150-307-0500, good and sufficient cause may also
include reasonable reliance on misinformation provided by enterprise zone sponsor
personnel, local zone manager or Oregon Business Development Department (doing business
as Business Oregon) personnel.

(3) The following is an example
of a filing deadline waiver request that the Department of Revenue would grant:

Example: A company began meeting with
the local zone manager in July 1999. The local zone manager assured the company
that it would be authorized and that construction could proceed. The company was
authorized in March 2000. Just prior to authorization in March 2000, during a physical
inspection of the property, the county discovered that a building was already under
construction. The company otherwise met the program criteria and filed a timely
enterprise zone exemption claim.

(1) “Additions to existing buildings
or structures” means an enlargement of building space including construction
which creates additional floor space or which creates more building volume by raising
a ceiling or roof and in the case of a structure includes, but is not limited to,
increasing the area of a parking lot to provide additional parking spaces.

(2) “Building”
means a real property improvement erected to stand more or less permanently, usually
with walls and roof, and designed for human use and occupancy or as a shelter. Building
includes, but is not limited to, warehouses and manufacturing plants. Building also
includes all structural components necessary to make the building usable such as
wiring, plumbing, a foundation, heating and cooling ducts.

(3) “Construction in
progress” means after work begins or that the foundation for the building
or structure was partially or wholly laid.

(a) Acceptable documentation
means a letter from the contractor, a building official or someone else who is not
an employee of the firm concerning when work began.

(b) “Beginning date
after interruption” means:

(A) If work begins and then
stops for six months or more and/or a new building permit is issued, the beginning
date is when work is resumed.

(B) If a firm goes out of
business, stops construction and sells the property, the beginning date is when
work is undertaken by the new owner.

(C) When rebuilding after
a fire, or some other natural disaster, work begins when construction starts, not
upon starting demolition or cleanup.

(4) “Destination resort”
as used in ORS 285C.135(5) means a facility with hotel accommodations at which visitors
stay in order to access amenities connected to the resort, including but not limited
to a development that satisfies the criteria under 197.435 to 197.467 for siting
on certain lands and for limiting or allowing uses and activities in accordance
with an acknowledged comprehensive plan.

(5) “Hotel or motel”
as used in ORS 285C.135(5) and consistent with 699.005 means a facility that:

(a) Offers rooms, suites
of rooms, cabins, houses or other such units for transient lodging to persons typically
from beyond the local area through direct overnight rental, time-share arrangements
or other types of limited transactions;

(b) May include one or more
visitor-oriented services, facilities or recreational activities, including but
not limited to restaurants, laundry, conference rooms, golf course, swimming pool,
tennis courts, ski runs, marinas or bicycle paths; and

(c) May be commonly described
or labeled as an inn, resort, convention center or by other such names.

(6) “Machinery and
equipment” means any property used in the business activity or process except
land, buildings and structures. It does not include furniture, commercial fixtures
or structural components of a building such as standard wiring, plumbing, heating
or cooling systems. Specialized pipes, air filtration systems, specialized wiring
or other systems necessary for the manufacturing process are considered machinery
and equipment rather than a structural component of a building. Machinery and equipment
that is not easily movable is considered to be real property. Machinery and equipment
that is readily movable is considered as personal property. “Readily movable”
property is generally unattached in any way to a building or structure and also
is not connected to other real property machinery and equipment. An example of “readily
movable” property would be tools, testing equipment or a personal computer.

(7) “Modification”
means to alter or change the elements of a property by modernization, renovation
or remodeling.

(a) “Modernization”
means to take corrective measures to bring a property into conformity with changes
in style.

(b) “Renovation”
means the process by which older structures or historic building are modernized,
remodeled or restored.

(c) “Remodeling means
a type of renovation that changes the basic plan, form or style of the property.

(8) “Personal or household
use or consumption” means consumption normally undertaken by an end user and
not by a business in the course of business operations.

(9) “Site preparation”
means an activity carried on to prepare raw land for construction including fill,
grading, leveling, installation of underground utilities and installation of utility
connections.

(10) “Structure”
means a real property improvement including ramps, loading docks, and parking surfaces.
Structure does not include buildings.

(1) For purposes of ORS 285C.409 and
this rule, a facility is “in service” when a certified business has
received a permit to occupy and use the building for its intended purpose.

(2) All real and personal
property including improvements, machinery, and equipment newly located at the facility
are exempt from ad valorem property tax for a minimum of seven and a maximum of
15 consecutive tax years. The period for the exemption commences with the first
tax year for which the facility was placed in service as of the assessment date
for that tax year. If there is no express written agreement between the certified
business firm and the zone sponsor on the number of tax years for which the facility
is to be exempt, the period for the exemption will be seven consecutive tax years.

(3) The following are examples
of how to determine the tax year for which the exemption commences:

Example 1: The property for which the
exemption is claimed was placed in service on November 15, 2002. The first assessment
date after the property was placed in service is January 1, 2003. Therefore, the
exemption commences with the 2003-04 tax year.

Example 2: The property
for which the exemption is claimed was placed in service on February 15, 2003. The
first assessment date after the property was placed in service is January 1, 2004.
Therefore, the exemption commences with the 2004-05 tax year.

(1) The county assessor will disqualify
the facility of a certified business firm from exemption if the certified business
firm does not begin operations and is not reasonably expected to begin operations.
A decision of the assessor to disqualify the property from exemption must be based
on one or more of the criteria listed in subsection (2). For purposes of this rule,
the date that a facility “begins operations” is the date that the facility
is placed in service, which, in turn, means the date a certified business has received
a permit to occupy or use the facility for its intended purpose.

(2) In determining whether
a facility should be disqualified because it has not begun operations and is not
reasonably expected to begin operations, the county assessor must consider the following:

(a) Operations by the certified
business firm have not started at the facility within 5 years from the date of starting
construction or reconstruction of the facility unless otherwise specified in an
agreement between the zone sponsor and the certified business firm;

(b) Two years have elapsed
from the last date construction or reconstruction activity on the facility ceased;

(c) The certified business
firm has notified the zone sponsor of the firm’s intent to cease construction
or installation of facility property or improvements;

(d) The expected date the
facility would first be placed in service, as specified on the Certification Application
or a revised date specified in a written notice to the assessor and zone manager
has elapsed;

(e) The certified business
firm has declared bankruptcy or has ceased to exist;

(f) The certified business
firm has notified the assessor and zone manager that the facility is inoperable.

The official copy of an Oregon Administrative Rule is
contained in the Administrative Order filed at the Archives Division,
800 Summer St. NE, Salem, Oregon 97310. Any discrepancies with the
published version are satisfied in favor of the Administrative Order.
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